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VCSH vs. ARKK: What’s The Difference?

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) and the ARK Innovation ETF (ARKK) are both among the Top 100 ETFs. VCSH is a Vanguard Short-Term Bond fund and ARKK is a ARK ETF Trust Mid-Cap Growth fund. So, what’s the difference between VCSH and ARKK? And which fund is better?

The expense ratio of VCSH is 0.70 percentage points lower than ARKK’s (0.05% vs. 0.75%). VCSH is mostly comprised of BBB bonds while ARKK has a high exposure to the technology sector. Overall, VCSH has provided lower returns than ARKK over the past ten years.

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In this article, we’ll compare VCSH vs. ARKK. We’ll look at industry exposure and annual returns, as well as at their holdings and portfolio growth. Moreover, I’ll also discuss VCSH’s and ARKK’s fund composition, risk metrics, and performance and examine how these affect their overall returns.

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Summary

VCSHARKK
NameVanguard Short-Term Corporate Bond Index Fund ETF SharesARK Innovation ETF
CategoryShort-Term BondMid-Cap Growth
IssuerVanguardARK ETF Trust
AUM47.88B25.52B
Avg. Return3.12%55.45%
Div. Yield1.89%0.0%
Expense Ratio0.05%0.75%

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) is a Short-Term Bond fund that is issued by Vanguard. It currently has 47.88B total assets under management and has yielded an average annual return of 3.12% over the past 10 years. The fund has a dividend yield of 1.89% with an expense ratio of 0.05%.

The ARK Innovation ETF (ARKK) is a Mid-Cap Growth fund that is issued by ARK ETF Trust. It currently has 25.52B total assets under management and has yielded an average annual return of 55.45% over the past 10 years. The fund has a dividend yield of 0.0% with an expense ratio of 0.75%.

VCSH’s dividend yield is 1.89% higher than that of ARKK (1.89% vs. 0.0%). Also, VCSH yielded on average 52.33% less per year over the past decade (3.12% vs. 55.45%). The expense ratio of VCSH is 0.70 percentage points lower than ARKK’s (0.05% vs. 0.75%).

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Fund Composition

Holdings

VCSH - Holdings

VCSH Bond SectorsWeight
BBB47.49%
A43.06%
AA8.45%
AAA0.95%
Below B0.03%
Others0.02%
B0.0%
BB0.0%
US Government0.0%

VCSH’s Top Bond Sectors are ratings of BBB, A, AA, AAA, and Below B at 47.49%, 43.06%, 8.45%, 0.95%, and 0.03%. The fund is less weighted towards Others (0.02%), B (0.0%), and BB (0.0%) rated bonds.

ARKK - Holdings

ARKK HoldingsWeight
Tesla Inc9.56%
Roku Inc Class A6.48%
Teladoc Health Inc5.76%
Square Inc A4.37%
Zoom Video Communications Inc4.36%
Shopify Inc A4.27%
Spotify Technology SA3.68%
Twilio Inc A3.66%
Coinbase Global Inc Ordinary Shares – Class A3.65%
Unity Software Inc Ordinary Shares3.41%

ARKK’s Top Holdings are Tesla Inc, Roku Inc Class A, Teladoc Health Inc, Square Inc A, and Zoom Video Communications Inc at 9.56%, 6.48%, 5.76%, 4.37%, and 4.36%.

Shopify Inc A (4.27%), Spotify Technology SA (3.68%), and Twilio Inc A (3.66%) have a slightly smaller but still significant weight. Coinbase Global Inc Ordinary Shares – Class A and Unity Software Inc Ordinary Shares are also represented in the ARKK’s holdings at 3.65% and 3.41%.

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Risk Analysis

VCSHARKK
Mean Return0.240
R-squared37.530
Std. Deviation2.340
Alpha0.930
Beta0.480
Sharpe Ratio0.970
Treynor Ratio4.750

The Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) has a Sharpe Ratio of 0.97 with a R-squared of 37.53 and a Alpha of 0.93. Its Beta is 0.48 while VCSH’s Treynor Ratio is 4.75. Furthermore, the fund has a Standard Deviation of 2.34 and a Mean Return of 0.24.

The ARK Innovation ETF (ARKK) has a Beta of 0 with a Standard Deviation of 0 and a Mean Return of 0. Its Sharpe Ratio is 0 while ARKK’s Treynor Ratio is 0. Furthermore, the fund has a Alpha of 0 and a R-squared of 0.

VCSH’s Mean Return is 0.24 points higher than that of ARKK and its R-squared is 37.53 points higher. With a Standard Deviation of 2.34, VCSH is slightly more volatile than ARKK. The Alpha and Beta of VCSH are 0.93 points higher and 0.48 points higher than ARKK’s Alpha and Beta.

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Performance

Annual Returns

VCSH vs. ARKK - Annual Returns

YearVCSHARKK
20205.08%152.52%
20196.85%35.73%
20180.91%3.58%
20172.45%87.38%
20162.63%-1.96%
20151.25%3.76%
20141.96%0.0%
20131.37%0.0%
20125.74%0.0%
20112.94%0.0%
20105.51%0.0%

VCSH had its best year in 2019 with an annual return of 6.85%. VCSH’s worst year over the past decade yielded 0.91% and occurred in 2018. In most years the Vanguard Short-Term Corporate Bond Index Fund ETF Shares provided moderate returns such as in 2017, 2016, and 2011 where annual returns amounted to 2.45%, 2.63%, and 2.94% respectively.

The year 2020 was the strongest year for ARKK, returning 152.52% on an annual basis. The poorest year for ARKK in the last ten years was 2016, with a yield of -1.96%. Most years the ARK Innovation ETF has given investors modest returns, such as in 2011, 2010, and 2018, when gains were 0.0%, 0.0%, and 3.58% respectively.

Portfolio Growth

VCSH vs. ARKK - Portfolio Growth

FundInitial BalanceFinal BalanceCAGR
VCSH$10,000$11,9123.12%
ARKK$10,000$65,21855.45%

A $10,000 investment in VCSH would have resulted in a final balance of $11,912. This is a profit of $1,912 over 5 years and amounts to a compound annual growth rate (CAGR) of 3.12%.

With a $10,000 investment in ARKK, the end total would have been $65,218. This equates to a $55,218 profit over 5 years and a compound annual growth rate (CAGR) of 55.45%.

VCSH’s CAGR is 52.33 percentage points lower than that of ARKK and as a result, would have yielded $53,306 less on a $10,000 investment. Thus, VCSH performed worse than ARKK by 52.33% annually.


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